World Kinect(US:WKC)2026-02-19 23:02Financial Data and Key Metrics Changes - The fourth quarter consolidated volume was 4.2 billion gallons, down 5% year-over-year, with full-year volume totaling 16.9 billion gallons, down approximately 4% [16] - Fourth quarter gross profit was $235 million, down 9% year-over-year, and full-year gross profit was $948 million, down 8% from 2024 [16][17] - Total non-GAAP adjustments in the fourth quarter were $325 million, with significant impairments primarily within the land segment [15] Business Line Data and Key Metrics Changes - Aviation volumes in the fourth quarter were 1.8 billion gallons, down 5% year-over-year, but gross profit increased approximately 8% to $130 million due to the Universal Trip Support acquisition [17][18] - Land volumes declined 9% year-over-year in the fourth quarter, with gross profit down 32% to $71 million, driven by unfavorable market conditions and exit activities [20][21] - Marine volumes were approximately 4.1 million metric tons in the fourth quarter, flat year-over-year, while gross profit increased 2% to $35 million [23] Market Data and Key Metrics Changes - The company is focusing on North America for its land business, emphasizing higher margin activities such as cardlock and retail, as well as natural gas [8][10] - The exit from European power and energy management businesses shifts focus to core areas that deliver consistent profitability [10] Company Strategy and Development Direction - The company is reshaping its portfolio to concentrate on businesses that deliver attractive and predictable returns, enhancing financial discipline and operational efficiency [6][12] - The acquisition of Universal Weather and Aviation's trip support services is expected to strengthen the company's role in global aviation services [7] - The strategic shift in the land segment aims to enhance returns and improve profitability, with a focus on cardlock, retail, and natural gas [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges that the fourth quarter performance fell short of expectations due to competitive pressures and underperformance in certain business lines [12] - The outlook for 2026 reflects confidence in the structural changes made, aiming for more consistent performance and growth in core businesses [13][30] - Management expects adjusted EPS for 2026 to be in the range of $2.20-$2.40, indicating solid year-over-year growth [27] Other Important Information - The company generated $34 million of operating cash flow and $13 million of free cash flow in the fourth quarter, with full-year free cash flow totaling $227 million [28] - An incremental $150 million share repurchase authorization was approved, reflecting confidence in the business [29] Q&A Session Summary Question: Impact of Universal Trip acquisition and tank wagon business sale - The Universal Trip Support business is expected to contribute approximately $70 million in gross profit for 2026, while the tank wagon business exit will shed about 1 billion gallons of volume [34][36] Question: Seasonality in land business after exiting European operations - The seasonality in the land business is expected to improve, with the main seasonality now related to aviation demand [41][42] Question: New model for managing fuel operations with independent operators - The new hybrid model allows for better cash flow and higher margins, with opportunities for growth in the convenience store space [46][47] Question: Competitive pressure in aviation and its implications - While competitive pressure is present, management is optimistic about finding new opportunities to expand airport locations and drive additional volume [50][51] Question: Factors for rebound in marine business - The marine business is influenced by macro factors such as price and volatility, with expectations for stability in 2026 [53][54]